Establishing a business requires a lot of time, effort and investment. There is another very important part which needs to be maintained, it is compliance. There are specific procedures for legalising a business and before it starts to commence business activity. First, the business needs to be registered as a regular tax-paying organisation through the government sanctioned tax authority of the country where the business will operate. Then, it needs to be established as a legal entity in the country through a business entity registration authority. In case of Australia, these organisations are Australian Taxation Office (ATO) and Australian Securities and Investments Commission (ASIC) respectively.
Regularly producing financial reports
Every business needs to provide consistent and clear financial reports to the government in accordance with the legislative requirements. At the end of each financial year, businesses and companies are required to prepare and lodge their financial reports to ASIC, after being properly audited. There may be exemptions allowed in some cases under special circumstances.
Lodgement of Business Activity Statement (BAS)
Lodgement of Business Activity Statements (BAS) is required for all businesses. This ensures the tax obligations of the individual businesses and their payments due to the ATO. BAS is personalised for each business or individual and it can be lodged in person, by mail or electronically. The time interval is determined by the time of the instalments due and it can be monthly, yearly or quarterly.
Accounting Standards
All accounting reports and procedures have to adhere to the accounting standards set by the Australian Accounting Standards Board (AASB). The standards are categorised by individual areas of focus like income tax, insurance contracts, financial instruments, joint arrangements, inventories, statement of cash flows, leases, interpretation of standards etc.
Exemption in accounting
In the unique case of a company not required to lodge their audited statutory accounts, the obligation moves onto the management. Mainly, the directors have to maintain and explain their accurate accounting records to reflect the company’s financial transactions and their financial position. The main reason behind choosing a management account is for taxation and to ensure that the company is fit to pay debts within their due time. Another reporting exemption is available for foreign-owned companies which have a branch office in Australia and sends their individual financial report to the main office and then they handle it.
This information is just to have a glimpse of the basic processes for business registration, financial activities that must be followed to adhere to the regulations and compliances. Some exceptions have also been discussed. Any information provided here is subject to change depending on the relevant authority’s decision and legislation.